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A National Approach to Waste Tyres

Commonwealth Department of Environment, 2001

Executive Summary

Introduction

Issues associated with waste tyres have exercised the minds of both government policy makers and sections of the tyre industry around the world for many years. Yet there remains a strong perception that waste tyres are not being managed as well as they might. A majority of waste tyres are disposed to landfill, and there are reportedly significant numbers that are dumped illegally or managed in other inappropriate ways. Whatever the environmental risks, such practices fail to extract any value from waste tyres.

The issues are:

Waste tyres have certain characteristics that should facilitate the introduction of higher value management practices. Waste tyres are ‘generated’ at a number of easily identified (though numerous) points, are relatively homogenous and are uncontaminated at collection point. At the end of its life, a tyre still has much of its structural, physical and chemical integrity. While this places certain difficulties in the way of subsequent processing, it also opens up a number of opportunities.

This study was commissioned by Environment Australia to document what is happening at the moment in terms of waste tyres, what is the potential for improvement, and how we might move to take advantage of the possibilities through action by government and industry at a national level. The structure of the study follows these objectives. A preliminary report was prepared (now Part I of this report) as the basis for discussion at a national workshop held on 14 December 2000. The aim of the workshop was to provide guidance for developing and evaluating possible policy options and responses (written up in Part II of the report).

Part I: Background to the Tyre and Rubber Industry

The preparation of Part I involved assembling information on the current situation and projected developments. The material is arranged under the following headings.

The tyre industry

The structure of the tyre industry can be expected to have an impact on which waste tyre management options may be viable. The industry consists of a number of segments: manufacturers, importers and dealers in the case of new tyres; collectors, transporters, retreaders, reprocessors and recyclers (including waste to energy) in the case of waste tyres.

Although only two companies manufacture new tyres in Australia, it would seem that the availability of imported tyres introduces a high level of competition in the new tyre market. However, in developing options for waste tyres, it is necessary to recognise the position of importance enjoyed by the tyre manufacturers.

In the waste tyre sectors there is also dominance in collection/transport in most States and Territories. At the same time, there are a large number of small waste tyre collectors; controls at the point of collection and the subsequent fate of tyres are reported to be poor.

Market considerations

One avenue for reducing the number of tyres being disposed is to reduce the rate of generation of waste tyres (waste avoidance). It is concluded that decisions in regard to tyres are dominated by purchase price in the case of private use vehicles, though fleet operators may pay considerably more attention to total costs taken over the life of tyres.

The report has assembled the limited available data on fees charged for managing waste tyres.

Regulatory and policy frameworks

Each State and Territory has imposed statutory and non-statutory controls on activities associated with waste tyres. These controls include licensing or registration requirements on industry players, limits on the number of tyres in certain situations, and restrictions on tyres going to landfill (whether whole or shredded). Management of tyres is subject also to broad-based environmental protection and waste management regulatory provisions.

While there are significant differences across jurisdictions, the common threads are concerns with illegal dumping and policies to promote more valuable uses of waste tyres.

Some of the substantive differences between jurisdictions will become less marked in the future as certain legislative proposals are progressively adopted, continuing the process of recent reform in the waste management area generally.

Environmental aspects of the tyre and rubber industries

Although the emphasis in the study is on waste tyres, it is important that environmental impacts from other parts of the life of a tyre are not forgotten. The environmental impacts of manufacture (mainly noise and air emissions) are not excessively greater than the general run of manufacturing industry. However, the manufacture of tyres consumes substantial quantities of energy, both in the manufacturing process but also ‘captured’ in the end product.

During their life, an average passenger tyre loses some 30% to 50% of its rubber content through wear and this has a range of environmental impacts. This is equivalent to a loss of approximately 0.03 g per km for a passenger tyre. Measures to improve tyre life would be expected to reduce these impacts. Poor tyre maintenance has been identified as a major contributor to the generation of waste tyres and increased fuel consumption.

Waste tyres contain a number of organic toxic materials as well as metals, but these are bound (at least in the medium term) in a stable matrix. In the absence of results from very long-term testing, the broad view is that waste tyres pose little direct threat to the environment. Certain past applications have been implicated in several problems such as accelerated stream bank erosion, disturbance of marine ecology (artificial reefs) and visual impacts.

However, by far the greatest environmental threats come from uncontrolled burning of tyres which liberates large volumes of toxic and unsightly emissions. The runoff from fighting tyre fires pollutes local waterways and soil. Waste tyres can also provide breeding grounds for mosquitoes and vermin.

The environmental impacts from non-tyre rubber products are similar to that for tyres except for the loss of tyre tread and the non-consumable nature of some non-tyre products.

Material flows in the tyre and rubber industries

Approximately 170,000 tonnes of waste tyres are generated in Australia each year, commonly expressed as 18 million equivalent passenger units (EPU)1 . Overall, the dominant fate of waste tyres is disposal to landfill (approximately 57%) with a further 13% inappropriate disposal. The greatest proportion of waste tyres used beneficially is as tyre derived fuel in cement kilns (22%). Rubber crumb currently accounts for approximately 5%. It is expected all these figures will change significantly in the medium term. Of the States, only Victoria and Queensland have a large number of tyres diverted from landfill (due to use of waste tyres for energy), and the number in Queensland is expected to rise in the future.

The generation rate for waste tyres is forecast to grow in line with vehicle kilometres travelled and is projected to increase to in excess of 20 million EPU by the year 2010. Tyres account for approximately half of the rubber consumed each year.

Practices for managing waste tyres

A wide range of possibilities have been considered (and put in practice) for managing a tyre once it becomes ‘waste’. The simplest, and still by far the most popular, method is to consign it to landfill (or dispose of the tyre illegally). For operational reasons, and to conserve landfill space, tyres are often shredded before disposal.

The tyre casing can be reused by adding a new tread. Retreading is not so widespread now as it was for passenger tyres (for a range of reasons), but the truck and bus industries use retreads extensively, as do certain fleet owners such as taxis.

Whole waste tyres have a range of applications, though some of these are no longer encouraged due to poor practices and the suspicion that in many cases they were disguised disposal. However, recent developments for use of waste tyres in properly engineered structures show considerable promise for using a large proportion of waste tyres in a very beneficial way.

Rubber crumb from waste tyres has been used in a wide range of applications, from rubber mats to playing surfaces to road making. The low strength of rubber crumb restricts its use to non-critical applications (such as the ones given above) where it faces stiff competition. There are conflicting views on the future expansion of markets for rubber crumb products, but recent and planned investment in plant suggests a high level of confidence.

There have been and continue to be research efforts directed at changing the chemistry of rubber crumb to increase its strength, so that is can be used in a wider range of applications, including retreads and new tyres. It is believed that there are no commercial facilities using these processes in Australia at the moment, though CSIRO has made announcements of recent developments that it is actively working to commercialise. Pyrolysis is another technique but considerable research has failed to find a process that is commercially robust.

More waste tyres are used in cement kilns than any other beneficial use. Tyres are used to replace fossil fuels as the source of energy, and the steel wire in tyres provides iron needed in making cement. Currently, two cement kilns burn some 30,000 tonnes of waste tyres per year, and other facilities are also considering using waste tyres for energy.

Finally, trials have been undertaken on the use of shredded tyres for stemming explosives in mine blasting (stemming is the material that is placed on top of explosives in drilled blast holes to contain and direct the explosion). This application has the potential to consume a large proportion of waste tyres generated in Australia each year, but the costs remain above landfill charges.

Part II: Analysis of Policy Options

Waste avoidance

Waste avoidance is reducing the number of tyres that are disposed by reducing the number of tyres generated. The possible approaches that are amenable to waste tyre policy consist of encouraging the purchase of tyres with extended tread life, increased use of retreaded tyres and better maintenance of tyres by vehicle owners.

The hurdles to be overcome in the case of passenger tyres are the relatively low contribution by tyres to the total costs of running a vehicle and the lack of knowledge on the part of the consumer. The most appropriate responses seem to be found in various types of programs to raise public awareness of the financial costs and environmental impacts and to provide information on better practices.

Reducing inappropriate tyre disposal

The greatest concerns for environmental damage from waste tyres is if they are disposed directly in the environment. Any overall program to manage waste tyres must, at the least, be able to address inappropriate disposal.

This is an area where performance is likely to depend to some extent on direct regulation. The weakest link in the waste tyre chain is at the point of ‘generation’ which, in the great majority of cases, is the dealer who retains waste tyres when new tyres are sold. The most direct approach is to impose specific requirements on the key players, including licensing or registration, and strong enforcement to back up the requirements. A nationally uniform scheme, for both the form of regulation and the rigour of enforcement, could be considered, but experience in other fields suggests that the details would still be left to individual jurisdictions. Based on past experience, it appears that a regulatory approach would be too resource-intensive for the outcomes that could be reasonably expected.

To close any ‘gaps’, either here or elsewhere in the tyre chain, a logical approach is to require that the movements of all waste tyres be tracked. In a tracking scheme, the tyre dealer (or other waste generator), the collector/transporter and the receival facility are each required to record the number of tyres that they handle and the previous and next step for the tyre in order to establish links. This is done conveniently by means of a multi-docket system. Experience with such a scheme in South Australia suggests that it can be quite effective. Simpler schemes based on inventory controls, while not offering the same assurance, may nevertheless be adequate, at least in the interim. The key to the effectiveness of such a scheme is effective audits.

Moving away from direct regulation, a more market-oriented approach is to guarantee a minimum payment for waste tyres at approved receival facilities. This would provide direct financial incentives for waste tyre collectors to manage tyres in a responsible way. The level at which the payment is set will determine how attractive this option is, and from how wide a catchment area waste tyres could be attracted.

Finally, there is the option of a tyre dealer environment rating scheme. Under such a scheme, dealers would be rated for the care they took to ensure that waste tyres were managed appropriately, as well as provision of information on tyre life and the value of good tyre maintenance. Although there are a number of design features to be resolved, such a scheme provides environmentally concerned consumers with a basis for selecting tyre dealers, and offers a commercial reward for tyre dealers who do the right thing.

Improved value from tyres - managing the resource

Options in this and the following section deal with opportunities to extract greater value from tyres, and expressly view waste tyres as a resource rather than as waste. The material is arranged so that this section is concerned with supply-side considerations while the next section is concerned with end-markets.

While the ‘problem’ with waste tyres is commonly viewed as a question of getting rid of them, in reality the supply of waste tyres is limited and will increase in the future at rates no greater than vehicle use. Moreover, there will always remain a number of waste tyres that are not available for beneficial use due, for example, to remoteness. On the other hand, many beneficial uses for waste tyres are capital intensive, and for these investments to be attractive guaranteed access to the waste tyre resource is required.

The highest level of security that can be provided is if the access is supported by statutory provisions. While this certainly meets the requirements for resource security, such arrangements would be very inflexible in the face of technological developments and changing market expectations. It would also be difficult to argue that the public benefit outweighed the anti-competitive nature of the legislation, or that other means of achieving the end could not be found.

A more flexible approach is to establish infrastructure to facilitate transactions between waste tyre generators and users of waste tyres. The physical infrastructure would consist of centralised regional facilities that would hold stocks of waste tyres to buffer the short-term fluctuations in supply and demand. The tyres would be suitably sorted and held under conditions which could be readily controlled to ensure they met environmental and fire safety requirements.

Associated with the physical infrastructure would be administrative arrangements that would be directed at establishing an orderly market in waste tyres. A number of suboptions could be considered varying with the degree of control over trades that is exercised by the scheme manager. At one end of the scale would be a free market situation where the manager was responsible only for the facilitation and integrity of the trades. At the other end of the scale is a scheme where the manager would specify, or at least approve, all transactions. In between these extremes are suboptions such as where the manager sets up a pool of waste tyres which are then sold to the highest bidder.

In principle, such a centralised administration scheme would provide benefits from a more orderly market in waste tyres. The design of the scheme that is eventually adopted would need to balance the benefits of market forces with some level of external control to avoid one or a small number of agents cornering the market, or to avoid price instability.

Special arrangements may be needed for waste tyres to be retreaded, where currently it is claimed by the retread industry that a major constraint on their operations is a shortage of supply of suitable casings in the sizes demanded by the retread market.

Improved value from tyres - industry assistance

Notwithstanding problems with access to the waste tyre resource, for many beneficial applications the limiting factor is the availability of markets for end products. Products made from waste tyres face barriers in terms of buyer acceptance (the image of recycled products has both positive and negative aspects) or the price-quality relationship makes it difficult to compete with other products.

Industry assistance programs are seen to have value in the case of an ‘infant industry’ situation, but because of the inevitable distortions they create should not be viewed as a long-term panacea for waste tyres. Notwithstanding concerns that have been identified with programs in the past, industry assistance is basically a market-driven device and, in general, is less distortionary and more flexible than direct regulation.

Direct financial assistance aims to alter the effective costs to recyclers so that their products can compete more readily and the demand for waste tyres is increased. One example is to provide unit benefits: a recycler receives a fixed payment for each waste tyre or kilogram of waste tyre material, the unit benefit varying across different end uses. A model for such a scheme is furnished by the Product Stewardship Arrangements (PSA) for Oil introduced at the beginning of 2001. One difficulty is to establish a basis for setting the unit benefit for each beneficial use.

Other direct assistance schemes could be targeted at specific proposed developments or sectors within the waste tyre industry, though such assistance suffers from the drawbacks common to the process of trying to ‘pick winners’.

In addition to direct financial assistance, there exist opportunities for broader industry programs; for instance, by looking at competing ‘markets’. The most significant competition in the case of waste tyres comes from landfills. Landfill gate fees should reflect the full costs of disposal for tyres, but consideration could be given to setting the fee so that it would be attractive for collectors to take waste tyres to other receival facilities. Alternatively the gate fee could be set so high that in effect waste tyres would be banned from landfills. The major drawback from such a scheme is that, in isolation, it encourages greater inappropriate disposal. In addition, this is a fairly blunt instrument and may result in transfers of money which do not greatly contribute to solving the waste tyre problem.

Other forms of legitimate industry assistance programs include market development and promotion, and support for research and development. The design and implementation of such programs face the problem of developing generic programs that provide broad benefits. More tightly targeted programs may benefit one sector of the tyre industry at the cost of the remainder of the industry.

Also possible are programs to encourage government purchasing policies to favour products made from waste tyres. Such schemes (which have been mandated in some states in the US for waste tyres in road making) may have merit in view of the implicit subsidies to certain competing products where prices do not reflect the true costs of manufacture.

The various options in this section are not mutually exclusive and a selection could be adopted simultaneously or at different times.

Waste tyres that need special consideration

Much of the discussion above has been implicitly dominated by the opportunities and impediments for tyres generated in urban areas, and mainly passenger tyres at that. Waste tyres generated in small or remote communities give rise to particular problems. The number of tyres in these locations are not sufficient to justify investment in conventional waste tyre management facilities that typically have high fixed costs and are capital intensive. And long distances and high transport costs preclude movement of the waste tyres to larger settlements.

The solution would be to develop new technologies that are viable for relatively small quantities of tyres or to collect the waste tyres for subsequent bulk transport under special pricing arrangements. However, policy responses are difficult to develop at the national level.

Specific questions need to be addressed in the case of waste tyres at mines and quarries. Large off-the-road tyres weighing up to 8 tonnes need special and expensive equipment to reduce their size for subsequent processing, but the large quantity of rubber may also offer opportunities, though further technological development is needed if these opportunities are to be realised. However, recent work in this area has failed to identify clearly attractive solutions.

Funding

Funding is needed for administration of the schemes to establish and manage the orderly movement of tyres, as well as to resource any industry assistance programs.

It is expected that the tyre industry will be required to fund these activities though, regardless of the type of scheme that is put in place, it can be expected that the costs will ultimately be borne in large part by consumers. A probable choice for funding is by means of a tyre levy, which could be managed either by industry or government. In view of international trade agreements, tyres manufactured in Australia will need to be treated identically to imported tyres. Since there are two manufacturers and less than 100 importers, applying a levy at the manufacture/import stage is administratively most straightforward (by comparison, a levy at point of sale would involve over 3,000 dealers across Australia).

Such a levy would constitute an excise and be administered by the Australian Tax Office and Customs Service. Once again, the experience of the PSA for Oil can be used as a basis for a waste tyre levy. Certain design details would need to be resolved, notably whether to apply the levy on a per tyre or per unit weight basis, and whether retreads are to be levied.

The PSA for Oil is to investigate and possibly trial a certificate based scheme, where manufacturers and importers need to purchase sufficient certificates from recyclers (in effect, though contractually from the Government who will operate the scheme) to cover the quantity of oil to be manufactured or imported. A similar scheme, suitably modified, could be considered for waste tyres. Certificate based schemes need careful planning to ensure that the benefits can be achieved without the potential downsides arising from higher levels of complexity and unfamiliarity.

Extended producer responsibility (EPR)

EPR is a strategy that transfers the cost of waste management from the community at large to those economic agents (producers) who are in the best position to influence the factors which are most problematic at the post consumer stage. EPR can provide strong incentives for producers to develop products that impose lower costs to manage the waste. Since the costs of eventual waste management are embedded in the prices paid for goods, consumers will respond by making product choices that reflect the true (life-cycle) costs of products.

One form of EPR is the levy scheme discussed earlier. Another form, which provides more control and incentives for tyre manufacturers and importers, is a take-back scheme. Overseas experience suggests that arrangements for individual producers to take back post-consumer products may in some cases be cumbersome and unworkable. In the case, for example, of packaging waste, governments in other countries have provided exemptions from EPR obligations if firms join a producer responsibility organisation (PRO) which operates at an industry level. The PRO shares many features and issues with the centralised administration schemes discussed above, though the distinction is that the PRO is a truly industry body.

Acknowledgments

In preparing this report, a wide-ranging consultation program was undertaken. The authors would like to thank all people contacted for generously making available the time to provide their valuable information and insights.


1One EPU represents the quantity of rubber in an ‘average’ passenger tyre. In this report one EPU is equivalent to 9.5 kg.